CASE 1

G.R. No. 135962 March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,
vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.
Not infrequently, the government is tempted to take legal shortcuts solve urgent problems of the people. But even when
government is armed with the best of intention, we cannot allow it to run roughshod over the rule of law. Again, we let the
hammer fall and fall hard on the illegal attempt of the MMDA to open for public use a private road in a private subdivision.
While we hold that the general welfare should be promoted, we stress that it should not be achieved at the expense of the
rule of law.
Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila. Respondent Bel-Air
Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose members are homeowners in Bel-Air Village, a
private subdivision in Makati City. Respondent BAVA is the registered owner of Neptune Street, a road inside Bel-Air Village.
On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated December 22, 1995
requesting respondent to open Neptune Street to public vehicular traffic starting January 2, 1996. The notice reads:
SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.
Dear President Lindo,
Please be informed that pursuant to the mandate of the MMDA law or Republic Act No. 7924 which requires the
Authority to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons,
Neptune Street shall be opened to vehicular traffic effective January 2, 1996.
In view whereof, the undersigned requests you to voluntarily open the points of entry and exit on said street.
Thank you for your cooperation and whatever assistance that may be extended by your association to the MMDA
personnel who will be directing traffic in the area.
Finally, we are furnishing you with a copy of the handwritten instruction of the President on the matter.
Very truly yours,
PROSPERO I. ORETA
1
Chairman
On the same day, respondent was apprised that the perimeter wall separating the subdivision from the adjacent
Kalayaan Avenue would be demolished.
On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch 136, Makati City, Civil
Case No. 96-001 for injunction. Respondent prayed for the issuance of a temporary restraining order and preliminary
injunction enjoining the opening of Neptune Street and prohibiting the demolition of the perimeter wall. The trial court issued
a temporary restraining order the following day.
On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary injunction. 2 Respondent questioned
the denial before the Court of Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular inspection of
Neptune Street 3 and on February 13, 1996, it issued a writ of preliminary injunction enjoining the implementation of the
MMDA's proposed action. 4
On January 28, 1997, the appellate court rendered a Decision on the merits of the case finding that the MMDA has no
authority to order the opening of Neptune Street, a private subdivision road and cause the demolition of its perimeter walls.
It held that the authority is lodged in the City Council of Makati by ordinance. The decision disposed of as follows:
WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23, 1995, in Civil Case No. 96-001, is SET
ASIDE and the Writ of Preliminary Injunction issued on February 13, 1996 is hereby made permanent.
5
For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in contempt is denied.
No pronouncement as to costs.
6
SO ORDERED.
The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence, this recourse.
Petitioner MMDA raises the following questions:
I
HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE MANDATE TO OPEN NEPTUNE STREET TO
PUBLIC TRAFFIC PURSUANT TO ITS REGULATORY AND POLICE POWERS?
II
IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE MMDA MAY ORDER THE OPENING OF
SUBDIVISION ROADS TO PUBLIC TRAFFIC?
III
IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING OR ASSAILING THE AUTHORITY OF
THE MMDA TO OPEN THE SUBJECT STREET?
IV
WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL MEETINGS HELD BETWEEN MMDA AND THE
AFFECTED EEL-AIR RESIDENTS AND BAVA OFFICERS?
V
HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS? 7
Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a private residential subdivision in the
heart of the financial and commercial district of Makati City. It runs parallel to Kalayaan Avenue, a national road open to the
general public. Dividing the two (2) streets is a concrete perimeter wall approximately fifteen (15) feet high. The western end
of Neptune Street intersects Nicanor Garcia, formerly Reposo Street, a subdivision road open to public vehicular traffic, while
its eastern end intersects Makati Avenue, a national road. Both ends of Neptune Street are guarded by iron gates.
Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic because it is an agent of the state
endowed with police power in the delivery of basic services in Metro Manila. One of these basic services is traffic
management which involves the regulation of the use of thoroughfares to insure the safety, convenience and welfare of the
general public. It is alleged that the police power of MMDA was affirmed by this Court in the consolidated cases of Sangalang
v. Intermediate Appellate Court. 8 From the premise that it has police power, it is now urged that there is no need for the City
of Makati to enact an ordinance opening Neptune street to the public. 9
Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the Constitution in the
legislature to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and ordinances, either
with penalties or without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of the
commonwealth, and for the subjects of the same. 10 The power is plenary and its scope is vast and pervasive, reaching and
justifying measures for public health, public safety, public morals, and the general welfare. 11
It bears stressing that police power is lodged primarily in the National Legislature. 12 It cannot be exercised by any group or
body of individuals not possessing legislative power. 13 The National Legislature, however, may delegate this power to the
President and administrative boards as well as the lawmaking bodies of municipal corporations or local government
units. 14 Once delegated, the agents can exercise only such legislative powers as are conferred on them by the national
lawmaking body. 15
A local government is a "political subdivision of a nation or state which is constituted by law and has substantial control of
local affairs." 16 The Local Government Code of 1991 defines a local government unit as a "body politic and corporate." 17 —
one endowed with powers as a political subdivision of the National Government and as a corporate entity representing the
inhabitants of its territory. 18 Local government units are the provinces, cities, municipalities and barangays. 19 They are also
the territorial and political subdivisions of the state. 20
Our Congress delegated police power to the local government units in the Local Government Code of 1991. This delegation
is found in Section 16 of the same Code, known as the general welfare clause, viz:
Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment
of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support
the development of appropriate and self-reliant scientific and technological capabilities, improve public morals,
enhance economic prosperity and social justice, promote full employment among their residents, maintain peace
and order, and preserve the comfort and convenience of their inhabitants. 21
Local government units exercise police power through their respective legislative bodies. The legislative body of the
provincial government is the sangguniang panlalawigan, that of the city government is the sangguniang panlungsod, that of
the municipal government is the sangguniang bayan, and that of the barangay is the sangguniang barangay. The Local
Government Code of 1991 empowers the sangguniang panlalawigan, sangguniang panlungsod and sangguniang bayan to
"enact ordinances, approve resolutions and appropriate funds for the general welfare of the [province, city or municipality,
as the case may be], and its inhabitants pursuant to Section 16 of the Code and in the proper exercise of the corporate
powers of the [province, city municipality] provided under the Code . . . " 22 The same Code gives the sangguniang
barangay the power to "enact ordinances as may be necessary to discharge the responsibilities conferred upon it by law or
ordinance and to promote the general welfare of the inhabitants thereon." 23
Metropolitan or Metro Manila is a body composed of several local government units — i.e., twelve (12) cities and five (5)
municipalities, namely, the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas,
Marikina, Paranaque and Valenzuela, and the municipalities of Malabon, Navotas, Pateros, San Juan and Taguig. With the
passage of Republic Act (R. A.) No. 7924 24 in 1995, Metropolitan Manila was declared as a "special development and
administrative region" and the Administration of "metro-wide" basic services affecting the region placed under "a
development authority" referred to as the MMDA. 25
"Metro-wide services" are those "services which have metro-wide impact and transcend local political boundaries or entail
huge expenditures such that it would not be viable for said services to be provided by the individual local government units
comprising Metro Manila." 26 There are seven (7) basic metro-wide services and the scope of these services cover the
following: (1) development planning; (2) transport and traffic management; (3) solid waste disposal and management; (4)
flood control and sewerage management; (5) urban renewal, zoning and land use planning, and shelter services; (6) health
and sanitation, urban protection and pollution control; and (7) public safety. The basic service of transport and traffic
management includes the following:
(b) Transport and traffic management which include the formulation, coordination, and monitoring of
policies, standards, programs and projects to rationalize the existing transport operations, infrastructure
requirements,the use of thoroughfares, and promotion of safe and convenient movement of persons and
goods; provision for the mass transport system and the institution of a system to regulate road users; administration
and implementation of all traffic enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metropolitan Manila;" 27
In the delivery of the seven (7) basic services, the MMDA has the following powers and functions:
Sec. 5. Functions and powers of the Metro Manila Development Authority. — The MMDA shall:
(a) Formulate, coordinate and regulate the implementation of medium and long-term plans and programs for the
delivery of metro-wide services, land use and physical development within Metropolitan Manila, consistent with
national development objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of medium-term investment programs for metro-wide
services which shall indicate sources and uses of funds for priority programs and projects, and which shall include
the packaging of projects and presentation to funding institutions;
(c) Undertake and manage on its own metro-wide programs and projects for the delivery of specific services under
its jurisdiction, subject to the approval of the Council. For this purpose, MMDA can create appropriate project
management offices;
(d) Coordinate and monitor the implementation of such plans, programs and projects in Metro Manila; identify
bottlenecks and adopt solutions to problems of implementation;
(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall coordinate and regulate the
implementation of all programs and projects concerning traffic management, specifically pertaining to
enforcement, engineering and education. Upon request, it shall be extended assistance and cooperation, including
but not limited to, assignment of personnel, by all other government agencies and offices concerned;
(f) Install and administer a single ticketing system, fix, impose and collect fines and penalties for all kinds of
violations of traffic rules and regulations, whether moving or non-moving in nature, and confiscate and suspend or
revoke drivers' licenses in the enforcement of such traffic laws and regulations, the provisions of RA 4136 and PD
 1605 to the contrary notwithstanding. For this purpose, the Authority shall impose all traffic laws and regulations in
Metro Manila, through its traffic operation center, and may deputize members of the PNP, traffic enforcers of local
government units, duly licensed security guards, or members of non-governmental organizations to whom may be
delegated certain authority, subject to such conditions and requirements as the Authority may impose; and
(g) Perform other related functions required to achieve the objectives of the MMDA, including the undertaking of
delivery of basic services to the local government units, when deemed necessary subject to prior coordination with
and consent of the local government unit concerned.
The implementation of the MMDA's plans, programs and projects is undertaken by the local government units, national
government agencies, accredited people's organizations, non-governmental organizations, and the private sector as well as
by the MMDA itself. For this purpose, the MMDA has the power to enter into contracts, memoranda of agreement and other
arrangements with these bodies for the delivery of the required services Metro Manila. 28
The governing board of the MMDA is the Metro Manila Council. The Council is composed of the mayors of the component 12
cities and 5 municipalities, the president of the Metro Manila Vice-Mayors' League and the president of the Metro Manila
Councilors' League. 29 The Council is headed by Chairman who is appointed by the President and vested with the rank of
cabinet member. As the policy-making body of the MMDA, the Metro Manila Council approves metro-wide plans, programs
and projects, and issues the necessary rules and regulations for the implementation of said plans; it approves the annual
budget of the MMDA and promulgate the rules and regulations for the delivery of basic services, collection of service and
regulatory fees, fines and penalties. These functions are particularly enumerated as follows:
Sec. 6. Functions of the Metro Manila Council. —
(a) The Council shall be the policy-making body of the MMDA;
(b) It shall approve metro-wide plans, programs and projects and issue rules and regulations deemed necessary by
the MMDA to carry out the purposes of this Act;
(c) It may increase the rate of allowances and per diems of the members of the Council to be effective during the
term of the succeeding Council. It shall fix the compensation of the officers and personnel of the MMDA, and approve
the annual budget thereof for submission to the Department of Budget and Management (DBM);
(d) It shall promulgate rules and regulations and set policies and standards for metro-wide application governing the
delivery of basic services, prescribe and collect service and regulatory fees, and impose and collect fines and
penalties.
Clearly, the scope of the MMDA's function is limited to the delivery of the seven (7) basic services. One of these is transport
and traffic management which includes the formulation and monitoring of policies, standards and projects to rationalize the
existing transport operations, infrastructure requirements, the use of thoroughfares and promotion of the safe movement of
persons and goods. It also covers the mass transport system and the institution of a system of road regulation, the
administration of all traffic enforcement operations, traffic engineering services and traffic education programs, including the
institution of a single ticketing system in Metro Manila for traffic violations. Under the service, the MMDA is expressly
authorized "to set the policies concerning traffic" and "coordinate and regulate the implementation of all traffic management
programs." In addition, the MMDA may "install and administer a single ticketing system," fix, impose and collect fines and
penalties for all traffic violations.
It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination, regulation,
implementation, preparation, management, monitoring, setting of policies, installation of a system and administration. There
is no syllable in R.A. No. 7924 that grants the MMDA police power, let alone legislative power. Even the Metro Manila Council
has not been delegated any legislative power. Unlike the legislative bodies of the local government units, there is no
provision in R.A. No. 7924 that empowers the MMDA or its Council to "enact ordinances, approve resolutions appropriate
funds for the general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself, "development
authority." 30 It is an agency created for the purpose of laying down policies and coordinating with the various national
government agencies, people's organizations, non-governmental organizations and the private sector for the efficient and
expeditious delivery of basic services in the vast metropolitan area. All its functions are administrative in nature and these
are actually summed up in the charter itself, viz:
Sec. 2. Creation of the Metropolitan Manila Development Authority. — . . . .
The MMDA shall perform planning, monitoring and coordinative functions, and in the process exercise regulatory and
supervisory authority over the delivery of metro-wide services within Metro Manila, without diminution of the
autonomy of the local government units concerning purely local matters. 31
Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court 32 where we upheld a zoning
ordinance issued by the Metro Manila Commission (MMC), the predecessor of the MMDA, as an exercise of police power. The
first Sangalang decision was on the merits of the petition, 33 while the second decision denied reconsideration of the first
case and in addition discussed the case of Yabut v. Court of Appeals. 34
Sangalang v. IAC involved five (5) consolidated petitions filed by respondent BAVA and three residents of Bel-Air Village
against other residents of the Village and the Ayala Corporation, formerly the Makati Development Corporation, as the
developer of the subdivision. The petitioners sought to enforce certain restrictive easements in the deeds of sale over their
respective lots in the subdivision. These were the prohibition on the setting up of commercial and advertising signs on the
lots, and the condition that the lots be used only for residential purposes. Petitioners alleged that respondents, who were
residents along Jupiter Street of the subdivision, converted their residences into commercial establishments in violation of
the "deed restrictions," and that respondent Ayala Corporation ushered in the full commercialization" of Jupiter Street by
tearing down the perimeter wall that separated the commercial from the residential section of the village. 35
The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati and Ordinance No. 81-01 of the
Metro Manila Commission (MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A Residential Zone, with its
boundary in the south extending to the center line of Jupiter Street. The Municipal Ordinance was adopted by the MMC under
the Comprehensive Zoning Ordinance for the National Capital Region and promulgated as MMC Ordinance No. 81-01. Bel-Air
Village was indicated therein as bounded by Jupiter Street and the block adjacent thereto was classified as a High Intensity
Commercial Zone. 36
We ruled that since both Ordinances recognized Jupiter Street as the boundary between Bel-Air Village and the commercial
district, Jupiter Street was not for the exclusive benefit of Bel-Air residents. We also held that the perimeter wall on said
street was constructed not to separate the residential from the commercial blocks but simply for security reasons, hence, in
tearing down said wall, Ayala Corporation did not violate the "deed restrictions" in the deeds of sale.
We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise of police power. 37 The power of
the MMC and the Makati Municipal Council to enact zoning ordinances for the general welfare prevailed over the "deed
restrictions".
In the second Sangalang/Yabut decision, we held that the opening of Jupiter Street was warranted by the demands of the
common good in terms of "traffic decongestion and public convenience." Jupiter was opened by the Municipal Mayor to
alleviate traffic congestion along the public streets adjacent to the Village. 38 The same reason was given for the opening to
public vehicular traffic of Orbit Street, a road inside the same village. The destruction of the gate in Orbit Street was also
made under the police power of the municipal government. The gate, like the perimeter wall along Jupiter, was a public
nuisance because it hindered and impaired the use of property, hence, its summary abatement by the mayor was proper
and legal. 39
Contrary to petitioner's claim, the two Sangalang cases do not apply to the case at bar. Firstly, both involved zoning
ordinances passed by the municipal council of Makati and the MMC. In the instant case, the basis for the proposed opening
of Neptune Street is contained in the notice of December 22, 1995 sent by petitioner to respondent BAVA, through its
president. The notice does not cite any ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the
MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner MMDA simply relied on its authority under
its charter "to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons."
Rationalizing the use of roads and thoroughfares is one of the acts that fall within the scope of transport and traffic
management. By no stretch of the imagination, however, can this be interpreted as an express or implied grant of ordinance-
making power, much less police power.
Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is the forerunner of the present
MMDA, an examination of Presidential Decree (P. D.) No. 824, the charter of the MMC, shows that the latter possessed
greater powers which were not bestowed on the present MMDA.
Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It comprised the Greater Manila Area
composed of the contiguous four (4) cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13) municipalities of
Makati, Mandaluyong, San Juan, Las Pinas, Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in
the province of Rizal, and Valenzuela in the province of Bulacan. 40 Metropolitan Manila was created as a response to the
finding that the rapid growth of population and the increase of social and economic requirements in these areas demand a
call for simultaneous and unified development; that the public services rendered by the respective local governments could
be administered more efficiently and economically if integrated under a system of central planning; and this coordination,
"especially in the maintenance of peace and order and the eradication of social and economic ills that fanned the flames of
rebellion and discontent [were] part of reform measures under Martial Law essential to the safety and security of the
State." 41
Metropolitan Manila was established as a "public corporation" with the following powers:
Sec. 1. Creation of the Metropolitan Manila. — There is hereby created a public corporation, to be known as the
Metropolitan Manila, vested with powers and attributes of a corporation including the power to make contracts, sue
and be sued, acquire, purchase, expropriate, hold, transfer and dispose of property and such other powers as are
necessary to carry out its purposes. The Corporation shall be administered by a Commission created under this
Decree. 42
The administration of Metropolitan Manila was placed under the Metro Manila Commission (MMC) vested with the following
powers:
Sec. 4. Powers and Functions of the Commission. — The Commission shall have the following powers and functions:
1. To act as a central government to establish and administer programs and provide services common to the area;
2. To levy and collect taxes and special assessments, borrow and expend money and issue bonds, revenue
certificates, and other obligations of indebtedness. Existing tax measures should, however, continue to be operative
until otherwise modified or repealed by the Commission;
3. To charge and collect fees for the use of public service facilities;
4. To appropriate money for the operation of the metropolitan government and review appropriations for the city and
municipal units within its jurisdiction with authority to disapprove the same if found to be not in accordance with the
established policies of the Commission, without prejudice to any contractual obligation of the local government units
involved existing at the time of approval of this Decree;
5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities and municipalities within
Metropolitan Manila;
6. To enact or approve ordinances, resolutions and to fix penalties for any violation thereof which shall not exceed a
fine of P10,000.00 or imprisonment of six years or both such fine and imprisonment for a single offense;
7. To perform general administrative, executive and policy-making functions;
8. To establish a fire control operation center, which shall direct the fire services of the city and municipal
governments in the metropolitan area;
9. To establish a garbage disposal operation center, which shall direct garbage collection and disposal in the
metropolitan area;
10. To establish and operate a transport and traffic center, which shall direct traffic activities;
11. To coordinate and monitor governmental and private activities pertaining to essential services such as
transportation, flood control and drainage, water supply and sewerage, social, health and environmental services,
housing, park development, and others;
12. To insure and monitor the undertaking of a comprehensive social, economic and physical planning and
development of the area;
13. To study the feasibility of increasing barangay participation in the affairs of their respective local governments
and to propose to the President of the Philippines definite programs and policies for implementation;
14. To submit within thirty (30) days after the close of each fiscal year an annual report to the President of the
Philippines and to submit a periodic report whenever deemed necessary; and
15. To perform such other tasks as may be assigned or directed by the President of the Philippines.
The MMC was the "central government" of Metro Manila for the purpose of establishing and administering programs
providing services common to the area. As a "central government" it had the power to levy and collect taxes and special
assessments, the power to charge and collect fees; the power to appropriate money for its operation, and at the same time,
review appropriations for the city and municipal units within its jurisdiction. It was bestowed the power to enact or approve
ordinances, resolutions and fix penalties for violation of such ordinances and resolutions. It also had the power to review,
amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and thirteen (13) municipalities
comprising Metro Manila.
P.D. No. 824 further provided:
Sec. 9. Until otherwise provided, the governments of the four cities and thirteen municipalities in the Metropolitan
Manila shall continue to exist in their present form except as may be inconsistent with this Decree. The members of
the existing city and municipal councils in Metropolitan Manila shall, upon promulgation of this Decree, and until
December 31, 1975, become members of the Sangguniang Bayan which is hereby created for every city and
municipality of Metropolitan Manila.
In addition, the Sangguniang Bayan shall be composed of as many barangay captains as may be determined and
chosen by the Commission, and such number of representatives from other sectors of the society as may be
appointed by the President upon recommendation of the Commission.
xxx xxx xxx
The Sangguniang Bayan may recommend to the Commission ordinances, resolutions or such measures as it may
adopt; Provided, that no such ordinance, resolution or measure shall become effective, until after its approval by the
Commission; and Provided further, that the power to impose taxes and other levies, the power to appropriate money
and the power to pass ordinances or resolutions with penal sanctions shall be vested exclusively in the Commission.
The creation of the MMC also carried with it the creation of the Sangguniang Bayan . This was composed of the members of
the component city and municipal councils, barangay captains chosen by the MMC and sectoral representatives appointed
by the President. The Sangguniang Bayan had the power to recommend to the MMC the adoption of ordinances, resolutions
or measures. It was the MMC itself, however, that possessed legislative powers. All ordinances, resolutions and measures
recommended by the Sangguniang Bayan were subject to the MMC's approval. Moreover, the power to impose taxes and
other levies, the power to appropriate money, and the power to pass ordinances or resolutions with penal sanctions were
vested exclusively in the MMC.
Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative police powers.
Whatever legislative powers the component cities and municipalities had were all subject to review and approval by the
MMC.
After President Corazon Aquino assumed power, there was a clamor to restore the autonomy of the local government units in
Metro Manila. Hence, Sections 1 and 2 of Article X of the 1987 Constitution provided:
Sec. 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities,
municipalities and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as herein
provided.
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
The Constitution, however, recognized the necessity of creating metropolitan regions not only in the existing National Capital
Region but also in potential equivalents in the Visayas and Mindanao. 43 Section 11 of the same Article X thus provided:
Sec. 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite as set
forth in Section 10 hereof. The component cities and municipalities shall retain their basic autonomy and shall be
entitled to their own local executives and legislative assemblies. The jurisdiction of the metropolitan authority that
will thereby be created shall be limited to basic services requiring coordination.
Constitution itself expressly provides that Congress may, by law, create "special metropolitan political subdivisions" which
shall be subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected; the
jurisdiction of this subdivision shall be limited to basic services requiring coordination; and the cities and municipalities
comprising this subdivision shall retain their basic services requiring coordination; and the cities and municipalities
comprising this subdivision shall retain their basic autonomy and their own local executive and legislative
assemblies. 44 Pending enactment of this law, the Transitory Provisions of the Constitution gave the President of the
Philippines the power to constitute the Metropolitan Authority, viz:
Sec. 8. Until otherwise provided by Congress, the President may constitute the Metropolitan Authority to be
composed of the heads of all local government units comprising the Metropolitan Manila area. 45
In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the Metropolitan Manila Authority (MMA).
The powers and functions of the MMC were devolved to the MMA. 46 It ought to be stressed, however, that not all powers and
functions of the MMC were passed to the MMA. The MMA's power was limited to the "delivery of basic urban services
requiring coordination in Metropolitan Manila." 47 The MMA's governing body, the Metropolitan Manila Council, although
composed of the mayors of the component cities and municipalities, was merely given power of: (1) formulation of policies
on the delivery of basic services requiring coordination and consolidation; and (2) promulgation resolutions and other
issuances, approval of a code of basic services and the exercise of its rule-making power. 48
Under the 1987 Constitution, the local government units became primarily responsible for the governance of their respective
political subdivisions. The MMA's jurisdiction was limited to addressing common problems involving basic services that
transcended local boundaries. It did not have legislative power. Its power was merely to provide the local government units
technical assistance in the preparation of local development plans. Any semblance of legislative power it had was confined
to a "review [of] legislation proposed by the local legislative assemblies to ensure consistency among local governments and
with the comprehensive development plan of Metro Manila," and to "advise the local governments accordingly." 49
When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and administrative region" and the
MMDA a "special development authority" whose functions were "without prejudice to the autonomy of the affected local
government units." The character of the MMDA was clearly defined in the legislative debates enacting its charter.
R.A. No. 7924 originated as House Bill No. 14170/11116 and was introduced by several legislators led by Dante Tinga, Roilo
Golez and Feliciano Belmonte. It was presented to the House of Representatives by the Committee on Local Governments
chaired by Congressman Ciriaco R. Alfelor. The bill was a product of Committee consultations with the local government units
in the National Capital Region (NCR), with former Chairmen of the MMC and MMA, 50 and career officials of said agencies.
When the bill was first taken up by the Committee on Local Governments, the following debate took place:
THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated a long time ago, you know. It's a
special . . . we can create a special metropolitan political subdivision.
Actually, there are only six (6) political subdivisions provided for in the Constitution: barangay, municipality, city,
province, and we have the Autonomous Region of Mindanao and we have the Cordillera. So we have 6. Now. . . . .
HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous Region, that is also specifically
mandated by the Constitution.
THE CHAIRMAN: That's correct. But it is considered to be a political subdivision. What is the meaning of a political
subdivision? Meaning to say, that it has its own government, it has its own political personality, it has the power to
tax, and all governmental powers: police power and everything. All right. Authority is different; because it does not
 have its own government. It is only a council, it is an organization of political subdivision, powers, "no, which is not
imbued with any political power.
If you go over Section 6, where the powers and functions of the Metro Manila Development Authority, it is purely
coordinative. And it provides here that the council is policy-making. All right.
Under the Constitution is a Metropolitan Authority with coordinative power. Meaning to say, it coordinates all of the
different basic services which have to be delivered to the constituency. All right.
There is now a problem. Each local government unit is given its respective . . . as a political subdivision. Kalookan
has its powers, as provided for and protected and guaranteed by the Constitution. All right, the exercise. However, in
the exercise of that power, it might be deleterious and disadvantageous to other local government units. So, we are
forming an authority where all of these will be members and then set up a policy in order that the basic services can
be effectively coordinated. All right.
Of course, we cannot deny that the MMDA has to survive. We have to provide some funds, resources. But it does not
possess any political power. We do not elect the Governor. We do not have the power to tax. As a matter of fact, I
was trying to intimate to the author that it must have the power to sue and be sued because it coordinates. All right.
It coordinates practically all these basic services so that the flow and the distribution of the basic services will be
continuous. Like traffic, we cannot deny that. It's before our eyes. Sewerage, flood control, water system, peace and
order, we cannot deny these. It's right on our face. We have to look for a solution. What would be the right solution?
All right, we envision that there should be a coordinating agency and it is called an authority. All right, if you do not
want to call it an authority, it's alright. We may call it a council or maybe a management agency.
51
xxx xxx xxx
Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that given to the Metro Manila
Council to promulgate administrative rules and regulations in the implementation of the MMDA's functions. There is no grant
of authority to enact ordinances and regulations for the general welfare of the inhabitants of the metropolis. This was
explicitly stated in the last Committee deliberations prior to the bill's presentation to Congress. Thus:
THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this was already approved before, but it
was reconsidered in view of the proposals, set-up, to make the MMDA stronger. Okay, so if there is no objection to
paragraph "f". . . And then next is paragraph "b," under Section 6. "It shall approve metro-wide plans, programs and
projects and issue ordinances or resolutions deemed necessary by the MMDA to carry out the purposes of this
Act." Do you have the powers? Does the MMDA... because that takes the form of a local government unit, a political
subdivision.
HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say that it has the policies, it's very clear that
those policies must be followed. Otherwise, what's the use of empowering it to come out with policies. Now, the
policies may be in the form of a resolution or it may be in the form of a ordinance. The term "ordinance" in this case
really gives it more teeth, your honor. Otherwise, we are going to see a situation where you have the power to adopt
the policy but you cannot really make it stick as in the case now, and I think here is Chairman Bunye. I think he will
agree that that is the case now. You've got the power to set a policy, the body wants to follow your policy, then we
say let's call it an ordinance and see if they will not follow it.
THE CHAIRMAN: That's very nice. I like that. However, there is a constitutional impediment. 1âwphi1 You are making
this MMDA a political subdivision. The creation of the MMDA would be subject to a plebiscite. That is what I'm trying
to avoid. I've been trying to avoid this kind of predicament. Under the Constitution it states: if it is a political
subdivision, once it is created it has to be subject to a plebiscite. I'm trying to make this as administrative. That's
why we place the Chairman as a cabinet rank.
HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is . . . . .
THE CHAIRMAN: In setting up ordinances, it is a political exercise, Believe me.
HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and regulations. That would be . . . it
shall also be enforced.
HON. BELMONTE: Okay, I will . . . .
HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction. But you know, ordinance has a
different legal connotation.
HON. BELMONTE: All right, I defer to that opinion, your Honor.
THE CHAIRMAN: So instead of ordinances, say rules and regulations.
HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions now.
THE CHAIRMAN: Rules and resolutions.
52
HON. BELMONTE: Rules, regulations and resolutions.
The draft of H. B. No. 14170/11116 was presented by the Committee to the House of Representatives. The explanatory note
to the bill stated that the proposed MMDA is a "development authority" which is a "national agency, not a political
government unit." 53 The explanatory note was adopted as the sponsorship speech of the Committee on Local Governments.
No interpellations or debates were made on the floor and no amendments introduced. The bill was approved on second
reading on the same day it was presented. 54
When the bill was forwarded to the Senate, several amendments were made.1âwphi1 These amendments, however, did not
affect the nature of the MMDA as originally conceived in the House of Representatives. 55
It is thus beyond doubt that the MMDA is not a local government unit or a public corporation endowed with legislative power.
It is not even a "special metropolitan political subdivision" as contemplated in Section 11, Article X of the Constitution. The
creation of a "special metropolitan political subdivision" requires the approval by a majority of the votes cast in a plebiscite
in the political units directly affected." 56 R. A. No. 7924 was not submitted to the inhabitants of Metro Manila in a plebiscite.
The Chairman of the MMDA is not an official elected by the people, but appointed by the President with the rank and
privileges of a cabinet member. In fact, part of his function is to perform such other duties as may be assigned to him by the
President, 57 whereas in local government units, the President merely exercises supervisory authority. This emphasizes the
administrative character of the MMDA.
Clearly then, the MMC under P.D. No. 824 is not the same entity as the MMDA under R.A. No. 7924. Unlike the MMC, the
MMDA has no power to enact ordinances for the welfare of the community. It is the local government units, acting through
their respective legislative councils, that possess legislative power and police power. In the case at bar, the Sangguniang
Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of Neptune Street, hence, its
proposed opening by petitioner MMDA is illegal and the respondent Court of Appeals did not err in so ruling. We desist from
ruling on the other issues as they are unnecessary.
We stress that this decision does not make light of the MMDA's noble efforts to solve the chaotic traffic condition in Metro
Manila. Everyday, traffic jams and traffic bottlenecks plague the metropolis. Even our once sprawling boulevards and
avenues are now crammed with cars while city streets are clogged with motorists and pedestrians. Traffic has become a
social malaise affecting our people's productivity and the efficient delivery of goods and services in the country. The MMDA
was created to put some order in the metropolitan transportation system but unfortunately the powers granted by its charter
are limited. Its good intentions cannot justify the opening for public use of a private street in a private subdivision without
any legal warrant. The promotion of the general welfare is not antithetical to the preservation of the rule of law.1âwphi1.nêt
IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 39549 are
affirmed.
SO ORDERED.

CASE 2
G.R. No. 111097 July 20, 1994
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING CORPORATION, respondents.
Aquilino G. Pimentel, Jr. and Associates for petitioners. R.R. Torralba & Associates for private respondent.
There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro City. Civic organizations
angrily denounced the project. The religious elements echoed the objection and so did the women's groups and the youth.
Demonstrations were led by the mayor and the city legislators. The media trumpeted the protest, describing the casino as
an affront to the welfare of the city.
The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided to expand its
operations to Cagayan de Oro City. To this end, it leased a portion of a building belonging to Pryce Properties Corporation,
Inc., one of the herein private respondents, renovated and equipped the same, and prepared to inaugurate its casino there
during the Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On December 7, 1992, it enacted
Ordinance No. 3353 reading as follows:
ORDINANCE NO. 3353
AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND CANCELLING EXISTING BUSINESS
PERMIT TO ANY ESTABLISHMENT FOR THE USING AND ALLOWING TO BE USED ITS PREMISES OR PORTION
THEREOF FOR THE OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in session assembled that:
Sec. 1. — That pursuant to the policy of the city banning the operation of casino within its territorial
jurisdiction, no business permit shall be issued to any person, partnership or corporation for the operation of
casino within the city limits.
Sec. 2. — That it shall be a violation of existing business permit by any persons, partnership or corporation to
use its business establishment or portion thereof, or allow the use thereof by others for casino operation and
other gambling activities.
Sec. 3. — PENALTIES. — Any violation of such existing business permit as defined in the preceding section
shall suffer the following penalties, to wit:
a) Suspension of the business permit for sixty (60) days for the first offense
and a fine of P1,000.00/day
b) Suspension of the business permit for Six (6) months for the second
offense, and a fine of P3,000.00/day
c) Permanent revocation of the business permit and imprisonment of One (1)
year, for the third and subsequent offenses.
Sec. 4. — This Ordinance shall take effect ten (10) days from publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY FOR VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990 against CASINO under its Resolution No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673, reiterating its policy against
the establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353, prohibiting the issuance of Business
Permit and to cancel existing Business Permit to any establishment for the using and allowing to be used its
premises or portion thereof for the operation of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local Government Code of 1991 (Rep. Act
7160) and under Art. 99, No. (4), Paragraph VI of the implementing rules of the Local Government Code, the City
Council as the Legislative Body shall enact measure to suppress any activity inimical to public morals and general
welfare of the people and/or regulate or prohibit such activity pertaining to amusement or entertainment in order to
protect social and moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled that:
Sec. 1. — The operation of gambling CASINO in the City of Cagayan de Oro is hereby prohibited.
Sec. 2. — Any violation of this Ordinance shall be subject to the following penalties:
a) Administrative fine of P5,000.00 shall be imposed against the proprietor, partnership or corporation undertaking
the operation, conduct, maintenance of gambling CASINO in the City and closure thereof;
b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine in the amount of P5,000.00 or
both at the discretion of the court against the manager, supervisor, and/or any person responsible in the
establishment, conduct and maintenance of gambling CASINO.
Sec. 3. — This Ordinance shall take effect ten (10) days after its publication in a local newspaper of general
circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenor and supplemental
petitioner. Their challenge succeeded. On March 31, 1993, the Court of Appeals declared the ordinances invalid and issued
the writ prayed for to prohibit their enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2
3
Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the Rules of Court. They
aver that the respondent Court of Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro does not have the power
and authority to prohibit the establishment and operation of a PAGCOR gambling casino within the City's
territorial limits.
2. The phrase "gambling and other prohibited games of chance" found in Sec. 458, par. (a), sub-par. (1) — (v)
of R.A. 7160 could only mean "illegal gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on that point.
4. The questioned Ordinances are discriminatory to casino and partial to cockfighting and are therefore
invalid on that point.
5. The questioned Ordinances are not reasonable, not consonant with the general powers and purposes of
the instrumentality concerned and inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR, G.R. No. 91649, May 14,
1991, 197 SCRA 53 in disposing of the issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of chance, including casinos
on land and sea within the territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements and Gaming
Corporation, 4 this Court sustained the constitutionality of the decree and even cited the benefits of the entity to the national
economy as the third highest revenue-earner in the government, next only to the BIR and the Bureau of Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the purposes indicated in
the Local Government Code. It is expressly vested with the police power under what is known as the General Welfare Clause
now embodied in Section 16 as follows:
Sec. 16. — General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient
and effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic prosperity and social justice, promote
full employment among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
In addition, Section 458 of the said Code specifically declares that:
Sec. 458. — Powers, Duties, Functions and Compensation. — (a) The Sangguniang Panlungsod, as the legislative
body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city
and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city
as provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this
connection, shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual
drunkenness in public places, vagrancy, mendicancy, prostitution, establishment and maintenance of houses
of ill repute, gamblingand other prohibited games of chance, fraudulent devices and ways to obtain money
or property, drug addiction, maintenance of drug dens, drug pushing, juvenile delinquency, the printing,
distribution or exhibition of obscene or pornographic materials or publications, and such other activities
inimical to the welfare and morals of the inhabitants of the city;
This section also authorizes the local government units to regulate properties and businesses within their territorial limits in
the interest of the general welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit the operation of casinos
because they involve games of chance, which are detrimental to the people. Gambling is not allowed by general law and
even by the Constitution itself. The legislative power conferred upon local government units may be exercised over all kinds
of gambling and not only over "illegal gambling" as the respondents erroneously argue. Even if the operation of casinos may
have been permitted under P.D. 1869, the government of Cagayan de Oro City has the authority to prohibit them within its
territory pursuant to the authority entrusted to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local autonomy as mandated in Article II, Section 25,
and Article X of the Constitution, as well as various other provisions therein seeking to strengthen the character of the
nation. In giving the local government units the power to prevent or suppress gambling and other social problems, the Local
Government Code has recognized the competence of such communities to determine and adopt the measures best expected
to promote the general welfare of their inhabitants in line with the policies of the State.
The petitioners also stress that when the Code expressly authorized the local government units to prevent and suppress
gambling and other prohibited games of chance, like craps, baccarat, blackjack and roulette, it meant allforms of gambling
without distinction. Ubi lex non distinguit, nec nos distinguere debemos. 6 Otherwise, it would have expressly excluded from
the scope of their power casinos and other forms of gambling authorized by special law, as it could have easily done. The
fact that it did not do so simply means that the local government units are permitted to prohibit all kinds of gambling within
their territories, including the operation of casinos.
The adoption of the Local Government Code, it is pointed out, had the effect of modifying the charter of the PAGCOR. The
Code is not only a later enactment than P.D. 1869 and so is deemed to prevail in case of inconsistencies between them. More
than this, the powers of the PAGCOR under the decree are expressly discontinued by the Code insofar as they do not
conform to its philosophy and provisions, pursuant to Par. (f) of its repealing clause reading as follows:
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this
Code are hereby repealed or modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the Local Government Code on P.D. 1869, the doubt
must be resolved in favor of the petitioners, in accordance with the direction in the Code calling for its liberal interpretation
in favor of the local government units. Section 5 of the Code specifically provides:
Sec. 5. Rules of Interpretation. — In the interpretation of the provisions of this Code, the following rules shall apply:
(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of
doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local government
unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local
government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be liberally interpreted to give more powers to local government
units in accelerating economic development and upgrading the quality of life for the people in the community; . . .
(Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of the Constitution and
several decisions of this Court expressive of the general and official disapprobation of the vice. They invoke the State
policies on the family and the proper upbringing of the youth and, as might be expected, call attention to the old case of U.S.
v. Salaveria,7 which sustained a municipal ordinance prohibiting the playing of panguingue. The petitioners decry the
immorality of gambling. They also impugn the wisdom of P.D. 1869 (which they describe as "a martial law instrument") in
creating PAGCOR and authorizing it to operate casinos "on land and sea within the territorial jurisdiction of the Philippines."
This is the opportune time to stress an important point.
The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally considered inimical to
the interests of the people, there is nothing in the Constitution categorically proscribing or penalizing gambling or, for that
matter, even mentioning it at all. It is left to Congress to deal with the activity as it sees fit. In the exercise of its own
discretion, the legislature may prohibit gambling altogether or allow it without limitation or it may prohibit some forms of
gambling and allow others for whatever reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but
permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its own wisdom, which this
Court has no authority to review, much less reverse. Well has it been said that courts do not sit to resolve the merits of
conflicting theories. 8 That is the prerogative of the political departments. It is settled that questions regarding the wisdom,
morality, or practicibility of statutes are not addressed to the judiciary but may be resolved only by the legislative and
executive departments, to which the function belongs in our scheme of government. That function is exclusive. Whichever
way these branches decide, they are answerable only to their own conscience and the constituents who will ultimately judge
their acts, and not to the courts of justice.
The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and Ordinance No. 3375-93
as enacted by the Sangguniang Panlungsod of Cagayan de Oro City. And we shall do so only by the criteria laid down by law
and not by our own convictions on the propriety of gambling.
9
The tests of a valid ordinance are well established. A long line of decisions has held that to be valid, an ordinance must
conform to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code, local government units are authorized to prevent
or suppress, among others, "gambling and other prohibited games of chance." Obviously, this provision excludes games of
chance which are not prohibited but are in fact permitted by law. The petitioners are less than accurate in claiming that the
Code could have excluded such games of chance but did not. In fact it does. The language of the section is clear and
unmistakable. Under the rule of noscitur a sociis, a word or phrase should be interpreted in relation to, or given the same
meaning of, words with which it is associated. Accordingly, we conclude that since the word "gambling" is associated with
"and other prohibited games of chance," the word should be read as referring to only illegal gambling which, like
the other prohibited games of chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite conclusively. But we will not. The vigorous efforts of
the petitioners on behalf of the inhabitants of Cagayan de Oro City, and the earnestness of their advocacy, deserve more
than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public policy embodied therein
insofar as they prevent PAGCOR from exercising the power conferred on it to operate a casino in Cagayan de Oro City. The
petitioners have an ingenious answer to this misgiving. They deny that it is the ordinances that have changed P.D. 1869 for
an ordinance admittedly cannot prevail against a statute. Their theory is that the change has been made by the Local
Government Code itself, which was also enacted by the national lawmaking authority. In their view, the decree has been, not
really repealed by the Code, but merely "modified pro tanto" in the sense that PAGCOR cannot now operate a casino over
the objection of the local government unit concerned. This modification of P.D. 1869 by the Local Government Code is
permissible because one law can change or repeal another law.
It seems to us that the petitioners are playing with words. While insisting that the decree has only been "modifiedpro tanto,"
they are actually arguing that it is already dead, repealed and useless for all intents and purposes because the Code has
shorn PAGCOR of all power to centralize and regulate casinos. Strictly speaking, its operations may now be not only
prohibited by the local government unit; in fact, the prohibition is not only discretionary but mandated by Section 458 of the
Code if the word "shall" as used therein is to be given its accepted meaning. Local government units have now no choice but
to prevent and suppress gambling, which in the petitioners' view includes both legal and illegal gambling. Under this
construction, PAGCOR will have no more games of chance to regulate or centralize as they must all be prohibited by the local
government units pursuant to the mandatory duty imposed upon them by the Code. In this situation, PAGCOR cannot
continue to exist except only as a toothless tiger or a white elephant and will no longer be able to exercise its powers as a
prime source of government revenue through the operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently discarding the rest of the
provision which painstakingly mentions the specific laws or the parts thereof which are repealed (or modified) by the Code.
Significantly, P.D. 1869 is not one of them. A reading of the entire repealing clause, which is reproduced below, will disclose
the omission:
Sec. 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the "Local Government Code,"
Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda and
issuances related to or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3) and b (2)
of Republic Act. No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as amended by
Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436 as
amended by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136
are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the provisions of
this Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Sections 12 of Presidential Decree No. 87, as
amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended; and
Section 16 of Presidential Decree No. 972, as amended, and
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative
regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby
repealed or modified accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear and unmistakable
showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication all proceed on the assumption that if the act of later date
clearly reveals an intention on the part of the lawmaking power to abrogate the prior law, this intention must be
given effect; but there must always be a sufficient revelation of this intention, and it has become an unbending rule
of statutory construction that the intention to repeal a former law will not be imputed to the Legislature when it
appears that the two statutes, or provisions, with reference to which the question arises bear to each other the
relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private respondent points out,
PAGCOR is mentioned as the source of funding in two later enactments of Congress, to wit, R.A. 7309, creating a Board of
Claims under the Department of Justice for the benefit of victims of unjust punishment or detention or of violent crimes, and
R.A. 7648, providing for measures for the solution of the power crisis. PAGCOR revenues are tapped by these two statutes.
This would show that the PAGCOR charter has not been repealed by the Local Government Code but has in fact been
improved as it were to make the entity more responsive to the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably destructive
confrontation, courts must exert every effort to reconcile them, remembering that both laws deserve a becoming respect as
the handiwork of a coordinate branch of the government. On the assumption of a conflict between P.D. 1869 and the Code,
the proper action is not to uphold one and annul the other but to give effect to both by harmonizing them if possible. This is
possible in the case before us. The proper resolution of the problem at hand is to hold that under the Local Government
Code, local government units may (and indeed must) prevent and suppress all kinds of gambling within their territories
except only those allowed by statutes like P.D. 1869. The exception reserved in such laws must be read into the Code, to
make both the Code and such laws equally effective and mutually complementary.
This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and those authorized by law.
Legalized gambling is not a modern concept; it is probably as old as illegal gambling, if not indeed more so. The petitioners'
suggestion that the Code authorizes them to prohibit all kinds of gambling would erase the distinction between these two
forms of gambling without a clear indication that this is the will of the legislature. Plausibly, following this theory, the City of
Manila could, by mere ordinance, prohibit the Philippine Charity Sweepstakes Office from conducting a lottery as authorized
by R.A. 1169 and B.P. 42 or stop the races at the San Lazaro Hippodrome as authorized by R.A. 309 and R.A. 983.
In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the petitioners that the
ordinances in question are valid. On the contrary, we find that the ordinances violate P.D. 1869, which has the character and
force of a statute, as well as the public policy expressed in the decree allowing the playing of certain games of chance
despite the prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal governments are
only agents of the national government. Local councils exercise only delegated legislative powers conferred on them by
Congress as the national lawmaking body. The delegate cannot be superior to the principal or exercise powers higher than
those of the latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from which they
have derived their power in the first place, and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature. It breathes
into them the breath of life, without which they cannot exist. As it creates, so it may destroy. As it may destroy, it
may abridge and control. Unless there is some constitutional limitation on the right, the legislature might, by a single
act, and if we can suppose it capable of so great a folly and so great a wrong, sweep from existence all of the
municipal corporations in the State, and the corporation could not prevent it. We know of no limitation on the right
so far as to the corporation themselves are concerned. They are, so to phrase it, the mere tenants at will of the
legislature. 11
This basic relationship between the national legislature and the local government units has not been enfeebled by the new
provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract from that policy, we
here confirm that Congress retains control of the local government units although in significantly reduced degree now than
under our previous Constitutions. The power to create still includes the power to destroy. The power to grant still includes the
power to withhold or recall. True, there are certain notable innovations in the Constitution, like the direct conferment on the
local government units of the power to tax, 12 which cannot now be withdrawn by mere statute. By and large, however, the
national legislature is still the principal of the local government units, which cannot defy its will or modify or violate it.
The Court understands and admires the concern of the petitioners for the welfare of their constituents and their
apprehensions that the welfare of Cagayan de Oro City will be endangered by the opening of the casino. We share the view
that "the hope of large or easy gain, obtained without special effort, turns the head of the workman" 13 and that "habitual
gambling is a cause of laziness and ruin." 14 In People v. Gorostiza, 15 we declared: "The social scourge of gambling must be
stamped out. The laws against gambling must be enforced to the limit." George Washington called gambling "the child of
avarice, the brother of iniquity and the father of mischief." Nevertheless, we must recognize the power of the legislature to
decide, in its own wisdom, to legalize certain forms of gambling, as was done in P.D. 1869 and impliedly affirmed in the Local
Government Code. That decision can be revoked by this Court only if it contravenes the Constitution as the touchstone of all
official acts. We do not find such contravention here.
We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on land and sea within
the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not been modified by the Local Government
Code, which empowers the local government units to prevent or suppress only those forms of gambling prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or nullified by a
mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact Ordinance
No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the operation
of casinos. For all their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy announced
therein and are therefore ultra vires and void.

WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals is AFFIRMED, with costs
against the petitioners. It is so ordered.

CASE 3
G.R. No. 91649 May 14, 1991
ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO SANCHEZ,petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent.

A TV ad proudly announces:
"The new PAGCOR — responding through responsible gaming."
But the petitioners think otherwise, that is why, they filed the instant petition seeking to annul the Philippine Amusement
and Gaming Corporation (PAGCOR) Charter — PD 1869, because it is allegedly contrary to morals, public policy and order,
and because —
A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by law. It waived the Manila
City government's right to impose taxes and license fees, which is recognized by law;
 B. For the same reason stated in the immediately preceding paragraph, the law has intruded into the local
government's right to impose local taxes and license fees. This, in contravention of the constitutionally enshrined
principle of local autonomy;
C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR — conducted gambling, while
most other forms of gambling are outlawed, together with prostitution, drug trafficking and other vices;
D. It violates the avowed trend of the Cory government away from monopolistic and crony economy, and toward free
enterprise and privatization. (p. 2, Amended Petition; p. 7, Rollo)
In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the declared national policy of the "new
restored democracy" and the people's will as expressed in the 1987 Constitution. The decree is said to have a "gambling
objective" and therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1 of Article VIII and Section 3 (2) of Article
XIV, of the present Constitution (p. 3, Second Amended Petition; p. 21, Rollo).
The procedural issue is whether petitioners, as taxpayers and practicing lawyers (petitioner Basco being also the Chairman
of the Committee on Laws of the City Council of Manila), can question and seek the annulment of PD 1869 on the alleged
grounds mentioned above.
The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A dated January 1, 1977
and was granted a franchise under P.D. 1067-B also dated January 1, 1977 "to establish, operate and maintain gambling
casinos on land or water within the territorial jurisdiction of the Philippines." Its operation was originally conducted in the
well known floating casino "Philippine Tourist." The operation was considered a success for it proved to be a potential source
of revenue to fund infrastructure and socio-economic projects, thus, P.D. 1399 was passed on June 2, 1978 for PAGCOR to
fully attain this objective.
Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the Government to regulate and centralize
all games of chance authorized by existing franchise or permitted by law, under the following declared policy —
Sec. 1. Declaration of Policy. — It is hereby declared to be the policy of the State to centralize and integrate all
games of chance not heretofore authorized by existing franchises or permitted by law in order to attain the following
objectives:
(a) To centralize and integrate the right and authority to operate and conduct games of chance into one corporate
entity to be controlled, administered and supervised by the Government.
(b) To establish and operate clubs and casinos, for amusement and recreation, including sports gaming pools,
(basketball, football, lotteries, etc.) and such other forms of amusement and recreation including games of chance,
which may be allowed by law within the territorial jurisdiction of the Philippines and which will: (1) generate sources
of additional revenue to fund infrastructure and socio-civic projects, such as flood control programs, beautification,
sewerage and sewage projects, Tulungan ng Bayan Centers, Nutritional Programs, Population Control and such other
essential public services; (2) create recreation and integrated facilities which will expand and improve the country's
existing tourist attractions; and (3) minimize, if not totally eradicate, all the evils, malpractices and corruptions that
are normally prevalent on the conduct and operation of gambling clubs and casinos without direct government
involvement. (Section 1, P.D. 1869)
To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines. Under its Charter's repealing clause,
all laws, decrees, executive orders, rules and regulations, inconsistent therewith, are accordingly repealed, amended or
modified.
It is reported that PAGCOR is the third largest source of government revenue, next to the Bureau of Internal Revenue and the
Bureau of Customs. In 1989 alone, PAGCOR earned P3.43 Billion, and directly remitted to the National Government a total of
P2.5 Billion in form of franchise tax, government's income share, the President's Social Fund and Host Cities' share. In
addition, PAGCOR sponsored other socio-cultural and charitable projects on its own or in cooperation with various
governmental agencies, and other private associations and organizations. In its 3 1/2 years of operation under the present
administration, PAGCOR remitted to the government a total of P6.2 Billion. As of December 31, 1989, PAGCOR was
employing 4,494 employees in its nine (9) casinos nationwide, directly supporting the livelihood of Four Thousand Four
Hundred Ninety-Four (4,494) families.
But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same is "null and void" for being
"contrary to morals, public policy and public order," monopolistic and tends toward "crony economy", and is violative of the
equal protection clause and local autonomy as well as for running counter to the state policies enunciated in Sections 11
(Personal Dignity and Human Rights), 12 (Family) and 13 (Role of Youth) of Article II, Section 1 (Social Justice) of Article XIII
and Section 2 (Educational Values) of Article XIV of the 1987 Constitution.
This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most deliberate consideration by the
Court, involving as it does the exercise of what has been described as "the highest and most delicate function which belongs
to the judicial department of the government." (State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146 SCRA 323).
As We enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of the government We
need not be reminded of the time-honored principle, deeply ingrained in our jurisprudence, that a statute is presumed to be
valid. Every presumption must be indulged in favor of its constitutionality. This is not to say that We approach Our task with
diffidence or timidity. Where it is clear that the legislature or the executive for that matter, has over-stepped the limits of its
authority under the constitution, We should not hesitate to wield the axe and let it fall heavily, as fall it must, on the
offending statute (Lozano v. Martinez, supra).
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar underscored the —
. . . thoroughly established principle which must be followed in all cases where questions of constitutionality as
obtain in the instant cases are involved. All presumptions are indulged in favor of constitutionality; one who attacks a
statute alleging unconstitutionality must prove its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional; that if any reasonable basis may be conceived which supports the
statute, it will be upheld and the challenger must negate all possible basis; that the courts are not concerned with
the wisdom, justice, policy or expediency of a statute and that a liberal interpretation of the constitution in favor of
the constitutionality of legislation should be adopted. (Danner v. Hass, 194 N.W. 2nd534, 539; Spurbeck v. Statton,
106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46 SCRA 734, 739 [1970]; Peralta v. Commission
on Elections, 82 SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited in Citizens
Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 521, 540)
Of course, there is first, the procedural issue. The respondents are questioning the legal personality of petitioners to file the
instant petition.
Considering however the importance to the public of the case at bar, and in keeping with the Court's duty, under the 1987
Constitution, to determine whether or not the other branches of government have kept themselves within the limits of the
Constitution and the laws and that they have not abused the discretion given to them, the Court has brushed aside
technicalities of procedure and has taken cognizance of this petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan ng
Pilipinas Inc. v. Tan, 163 SCRA 371)
 With particular regard to the requirement of proper party as applied in the cases before us, We hold that the same is
satisfied by the petitioners and intervenors because each of them has sustained or is in danger of sustaining an
immediate injury as a result of the acts or measures complained of. And even if, strictly speaking they are not
covered by the definition, it is still within the wide discretion of the Court to waive the requirement and so remove
the impediment to its addressing and resolving the serious constitutional questions raised.
In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to question the constitutionality
of several executive orders issued by President Quirino although they were involving only an indirect and general
interest shared in common with the public. The Court dismissed the objection that they were not proper parties and
ruled that "the transcendental importance to the public of these cases demands that they be settled promptly and
definitely, brushing aside, if we must technicalities of procedure." We have since then applied the exception in many
other cases. (Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).
Having disposed of the procedural issue, We will now discuss the substantive issues raised.
Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of gambling does not mean that
the Government cannot regulate it in the exercise of its police power.
The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact
legislation that may interfere with personal liberty or property in order to promote the general welfare." (Edu v. Ericta, 35
SCRA 481, 487) As defined, it consists of (1) an imposition or restraint upon liberty or property, (2) in order to foster the
common good. It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-
comprehensive embrace. (Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386).
Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides
enough room for an efficient and flexible response to conditions and circumstances thus assuming the greatest benefits.
(Edu v. Ericta, supra)
It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the charter. Along with the taxing
power and eminent domain, it is inborn in the very fact of statehood and sovereignty. It is a fundamental attribute of
government that has enabled it to perform the most vital functions of governance. Marshall, to whom the expression has
been credited, refers to it succinctly as the plenary power of the state "to govern its citizens". (Tribe, American Constitutional
Law, 323, 1978). The police power of the State is a power co-extensive with self-protection and is most aptly termed the "law
of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708) It is "the most essential, insistent, and
illimitable of powers." (Smith Bell & Co. v. National, 40 Phil. 136) It is a dynamic force that enables the state to meet the
agencies of the winds of change.
What was the reason behind the enactment of P.D. 1869?
P.D. 1869 was enacted pursuant to the policy of the government to "regulate and centralize thru an appropriate institution all
games of chance authorized by existing franchise or permitted by law" (1st whereas clause, PD 1869). As was subsequently
proved, regulating and centralizing gambling operations in one corporate entity — the PAGCOR, was beneficial not just to the
Government but to society in general. It is a reliable source of much needed revenue for the cash strapped Government. It
provided funds for social impact projects and subjected gambling to "close scrutiny, regulation, supervision and control of
the Government" (4th Whereas Clause, PD 1869). With the creation of PAGCOR and the direct intervention of the
Government, the evil practices and corruptions that go with gambling will be minimized if not totally eradicated. Public
welfare, then, lies at the bottom of the enactment of PD 1896.
Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes and legal fees; that
the exemption clause in P.D. 1869 is violative of the principle of local autonomy. They must be referring to Section 13 par. (2)
of P.D. 1869 which exempts PAGCOR, as the franchise holder from paying any "tax of any kind or form, income or otherwise,
as well as fees, charges or levies of whatever nature, whether National or Local."
(2) Income and other taxes. — a) Franchise Holder: No tax of any kind or form, income or otherwise as well as fees,
charges or levies of whatever nature, whether National or Local, shall be assessed and collected under this franchise
from the Corporation; nor shall any form or tax or charge attach in any way to the earnings of the Corporation,
except a franchise tax of five (5%) percent of the gross revenues or earnings derived by the Corporation from its
operations under this franchise. Such tax shall be due and payable quarterly to the National Government and shall
be in lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or description, levied, established or
collected by any municipal, provincial or national government authority (Section 13 [2]).
Their contention stated hereinabove is without merit for the following reasons:
(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes (Icard v. City of Baguio, 83
Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter or
statute must plainly show an intent to confer that power or the municipality cannot assume it" (Medina v. City of Baguio, 12
SCRA 62). Its "power to tax" therefore must always yield to a legislative act which is superior having been passed upon by
the state itself which has the "inherent power to tax" (Bernas, the Revised [1973] Philippine Constitution, Vol. 1, 1983 ed. p.
445).
(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that "municipal corporations are
mere creatures of Congress" (Unson v. Lacson, G.R. No. 7909, January 18, 1957) which has the power to "create and abolish
municipal corporations" due to its "general legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5
SCRA 541). Congress, therefore, has the power of control over Local governments (Hebron v. Reyes, G.R. No. 9124, July 2,
1950). And if Congress can grant the City of Manila the power to tax certain matters, it can also provide for exemptions or
even take back the power.
(c) The City of Manila's power to impose license fees on gambling, has long been revoked. As early as 1975, the power of
local governments to regulate gambling thru the grant of "franchise, licenses or permits" was withdrawn by P.D. No. 771 and
was vested exclusively on the National Government, thus:
Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered cities and other local
governments to issue license, permit or other form of franchise to operate, maintain and establish horse and dog
race tracks, jai-alai and other forms of gambling is hereby revoked.
Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and dog race tracks, jai-alai and
other forms of gambling shall be issued by the national government upon proper application and verification of the
qualification of the applicant . . .
Therefore, only the National Government has the power to issue "licenses or permits" for the operation of gambling.
Necessarily, the power to demand or collect license fees which is a consequence of the issuance of "licenses or permits" is
no longer vested in the City of Manila.
(d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR is a government owned
or controlled corporation with an original charter, PD 1869. All of its shares of stocks are owned by the National Government.
In addition to its corporate powers (Sec. 3, Title II, PD 1869) it also exercises regulatory powers thus:
 Sec. 9. Regulatory Power. — The Corporation shall maintain a Registry of the affiliated entities, and shall exercise all
the powers, authority and the responsibilities vested in the Securities and Exchange Commission over such affiliating
entities mentioned under the preceding section, including, but not limited to amendments of Articles of Incorporation
and By-Laws, changes in corporate term, structure, capitalization and other matters concerning the operation of the
affiliated entities, the provisions of the Corporation Code of the Philippines to the contrary notwithstanding, except
only with respect to original incorporation.
PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental, which places it in the
category of an agency or instrumentality of the Government. Being an instrumentality of the Government, PAGCOR should
be and actually is exempt from local taxes. Otherwise, its operation might be burdened, impeded or subjected to control by a
mere Local government.
The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the operation
of constitutional laws enacted by Congress to carry into execution the powers vested in the federal government. (MC
Culloch v. Marland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government over local governments.
Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on the part of the
States to touch, in that way (taxation) at least, the instrumentalities of the United States (Johnson v. Maryland, 254
US 51) and it can be agreed that no state or political subdivision can regulate a federal instrumentality in such a way
as to prevent it from consummating its federal responsibilities, or even to seriously burden it in the accomplishment
of them. (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of what local authorities may perceive
to be undesirable activities or enterprise using the power to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v. Maryland, supra) cannot be
allowed to defeat an instrumentality or creation of the very entity which has the inherent power to wield it.
(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D. 1869. This is a pointless
argument. Article X of the 1987 Constitution (on Local Autonomy) provides:
Sec. 5. Each local government unit shall have the power to create its own source of revenue and to levy taxes, fees,
and other charges subject to such guidelines and limitation as the congress may provide, consistent with the basic
policy on local autonomy. Such taxes, fees and charges shall accrue exclusively to the local government. (emphasis
supplied)
The power of local government to "impose taxes and fees" is always subject to "limitations" which Congress may provide by
law. Since PD 1869 remains an "operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution),
its "exemption clause" remains as an exception to the exercise of the power of local governments to impose taxes and fees.
It cannot therefore be violative but rather is consistent with the principle of local autonomy.
Besides, the principle of local autonomy under the 1987 Constitution simply means "decentralization" (III Records of the
1987 Constitutional Commission, pp. 435-436, as cited in Bernas, The Constitution of the Republic of the Philippines, Vol. II,
First Ed., 1988, p. 374). It does not make local governments sovereign within the state or an "imperium in imperio."
Local Government has been described as a political subdivision of a nation or state which is constituted by law and
has substantial control of local affairs. In a unitary system of government, such as the government under the
Philippine Constitution, local governments can only be an intra sovereign subdivision of one sovereign nation, it
cannot be an imperium in imperio. Local government in such a system can only mean a measure of decentralization
of the function of government. (emphasis supplied)
As to what state powers should be "decentralized" and what may be delegated to local government units remains a matter
of policy, which concerns wisdom. It is therefore a political question. (Citizens Alliance for Consumer Protection v. Energy
Regulatory Board, 162 SCRA 539).
What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a State concern and hence, it is
the sole prerogative of the State to retain it or delegate it to local governments.
As gambling is usually an offense against the State, legislative grant or express charter power is generally necessary
to empower the local corporation to deal with the subject. . . . In the absence of express grant of power to
enact, ordinance provisions on this subject which are inconsistent with the state laws are void. (Ligan v. Gadsden,
Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440, 27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22
Am St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis supplied)
Petitioners next contend that P.D. 1869 violates the equal protection clause of the Constitution, because "it legalized
PAGCOR — conducted gambling, while most gambling are outlawed together with prostitution, drug trafficking and other
vices" (p. 82, Rollo).
We, likewise, find no valid ground to sustain this contention. The petitioners' posture ignores the well-accepted meaning of
the clause "equal protection of the laws." The clause does not preclude classification of individuals who may be accorded
different treatment under the law as long as the classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101
Phil. 1155). A law does not have to operate in equal force on all persons or things to be conformable to Article III, Section 1
of the Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989).
The "equal protection clause" does not prohibit the Legislature from establishing classes of individuals or objects upon which
different rules shall operate (Laurel v. Misa, 43 O.G. 2847). The Constitution does not require situations which are different in
fact or opinion to be treated in law as though they were the same (Gomez v. Palomar, 25 SCRA 827).
Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection is not clearly explained in
the petition. The mere fact that some gambling activities like cockfighting (P.D 449) horse racing (R.A. 306 as amended by
RA 983), sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are legalized under certain conditions, while
others are prohibited, does not render the applicable laws, P.D. 1869 for one, unconstitutional.
If the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances
to which it might have been applied. (Gomez v. Palomar, 25 SCRA 827)
The equal protection clause of the 14th Amendment does not mean that all occupations called by the same name
must be treated the same way; the state may do what it can to prevent which is deemed as evil and stop short of
those cases in which harm to the few concerned is not less than the harm to the public that would insure if the rule
laid down were made mathematically exact. (Dominican Hotel v. Arizona, 249 US 2651).
Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory Government away from monopolies and
crony economy and toward free enterprise and privatization" suffice it to state that this is not a ground for this Court to
nullify P.D. 1869. If, indeed, PD 1869 runs counter to the government's policies then it is for the Executive Department to
recommend to Congress its repeal or amendment.
 The judiciary does not settle policy issues. The Court can only declare what the law is and not what the law should
be.1âwphi1 Under our system of government, policy issues are within the domain of the political branches of
government and of the people themselves as the repository of all state power. (Valmonte v. Belmonte, Jr., 170 SCRA
256).
On the issue of "monopoly," however, the Constitution provides that:
Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires. No combinations in
restraint of trade or unfair competition shall be allowed. (Art. XII, National Economy and Patrimony)
It should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the Constitution. The state
must still decide whether public interest demands that monopolies be regulated or prohibited. Again, this is a matter of
policy for the Legislature to decide.
On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12 (Family) and 13 (Role of Youth) of
Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution,
suffice it to state also that these are merely statements of principles and, policies. As such, they are basically not self-
executing, meaning a law should be passed by Congress to clearly define and effectuate such principles.
In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for enforcement
through the courts. They were rather directives addressed to the executive and the legislature. If the executive and
the legislature failed to heed the directives of the articles the available remedy was not judicial or political. The
electorate could express their displeasure with the failure of the executive and the legislature through the language
of the ballot. (Bernas, Vol. II, p. 2)
Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad, 47 Phil. 387; Salas v. Jarencio, 48
SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it must
be shown that there is a clear and unequivocal breach of the Constitution, not merely a doubtful and equivocal one. In other
words, the grounds for nullity must be clear and beyond reasonable doubt. (Peralta v. Comelec, supra) Those who petition
this Court to declare a law, or parts thereof, unconstitutional must clearly establish the basis for such a declaration.
Otherwise, their petition must fail. Based on the grounds raised by petitioners to challenge the constitutionality of P.D. 1869,
the Court finds that petitioners have failed to overcome the presumption. The dismissal of this petition is therefore,
inevitable. But as to whether P.D. 1869 remains a wise legislation considering the issues of "morality, monopoly, trend to free
enterprise, privatization as well as the state principles on social justice, role of youth and educational values" being raised, is
up for Congress to determine.
As this Court held in Citizens' Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 521 —
Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in its favor the presumption
of validity and constitutionality which petitioners Valmonte and the KMU have not overturned. Petitioners have not
undertaken to identify the provisions in the Constitution which they claim to have been violated by that statute. This
Court, however, is not compelled to speculate and to imagine how the assailed legislation may possibly offend some
provision of the Constitution. The Court notes, further, in this respect that petitioners have in the main put in
question the wisdom, justice and expediency of the establishment of the OPSF, issues which are not properly
addressed to this Court and which this Court may not constitutionally pass upon. Those issues should be addressed
rather to the political departments of government: the President and the Congress.
Parenthetically, We wish to state that gambling is generally immoral, and this is precisely so when the gambling resorted to
is excessive. This excessiveness necessarily depends not only on the financial resources of the gambler and his family but
also on his mental, social, and spiritual outlook on life. However, the mere fact that some persons may have lost their
material fortunes, mental control, physical health, or even their lives does not necessarily mean that the same are directly
attributable to gambling. Gambling may have been the antecedent, but certainly not necessarily the cause. For the same
consequences could have been preceded by an overdose of food, drink, exercise, work, and even sex.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.